News Archives - Andria Papageorgiou

Benefits of doing business in Cyprus in 2021

A. Introduction

Cyprus has a modern, free-market, service-based economy giving international investors and domestic businesses confidence to invest, grow and prosper. The tertiary sector of services is considered the backbone of the Cyprus economy and with a high income per capita, the consumer market is particularly strong.

B. Reasons why Cyprus is one of the best options for your business

Many Investment Opportunities
Cyprus offers many investment opportunities.It is one of the most touristic countries in the Mediterranean and Europe as a whole; it is one of the global shipping powers; it has a thriving real estate business, and its financial business still has a ton of room to grow.There are also other opportunities in gas, agricultural and fishing.
Entryway To Europe
Cyprus is a popular destination for businesses that are starting to operate in Europe. In a continent where there’s so much fiscal and bureaucratic pressure, Cyprus is a breeze of fresh air.Starting and running a business is simple. If you wish to start a financial business, financial licenses in Cyprus are reputable offering peace of mind for investors and have passporting rights.It means you can choose Cyprus as your European headquarters to operate your business without any additional licensing requirements for other EU members or needing to establish branches or offices.
Cyprus Is Business Friendly
The government took many business initiatives. For example, it introduced many tax incentives, opened the country to investors, established an attractive non-dom status for foreigners and provided tax credits for fund managers.It also created citizenship and residency by investment programs, and reformed banking laws so that banks could securitize loans, reducing their NPL exponentially.
Bilingual Population And Workforce
More than 70 % of the Cypriot population speaks English, and the island has a well-established expat community.More than half of the Cypriot residents hold tertiary qualifications as well. This means the island has an apt public sector and top-notch service providers of all kinds (accounting, legal services, tax planning, and more) that can help you start operating in Cyprus.
Quality Low Cost Of Living Environment
When compared to the services and easy life offered by the country, its cost of living is among the lowest in the European Union.The country has a modern infrastructure with great telecommunications. All this led to Cyprus being named the 5th best relocation destination in the world by a Knight Frank report, one of the world’s leading real estate consultants.This is why the country has the second-highest percentage of foreigners in the EU, with almost 20%.

C. Benefits of doing business in Cyprus

Our Clients looking to set up a business in Cyprus will enjoy a fast, stress-free and cost effective process because:

A Cyprus Limited Liability Company can be 100% foreign owned and required only 1 shareholder and director of any nationality who can either be an individual or a corporate entity and must not be resident in Cyprus; It would be worth mentioning that all shareholders and director’s details of a Cyprus company are available for public viewing on the Cyprus Department of Registrar of Companies website; which may not be ideal for foreign investors seeking anonymity;
The share capital of the company does not have to be fully paid in cash at the time of incorporation. You can pay it up later at any stage.
Foreign owned companies are permitted to invest in every business sector in Cyprus without any restrictions or stringent licensing requirements except for a few regulated sectors such as banking and financial services and media;
Using our Law Firm, our Client can obtain a Cyprus company registration number and tax number and commence the operations in Cyprus within a period of 2 weeks;
Following business registration, our Law Firm can open a corporate bank account with one of the leading banks in Cyprus, including Bank of Cyprus and Hellenic Bank without our Client traveling to Cyprus;
You can open a bank account for a Cyprus company in any country you want;
Entrepreneurs registering business in Cyprus will enjoy considerably lower administrative and operational costs compared to most of other countries in the EU region.

Our Client doing business in Cyprus will benefit from various tax incentives including:

The standard corporate tax rate in Cyprus is 12.5%, which is one of the lowest corporate tax rates in Europe, if generated within Cyprus, otherwise its corporate tax is 0%. Cyprus is a low tax jurisdiction not a Tax Haven.. Additionally, the government does not impose any capital gains tax; For a company to tax advantage of the multiple Cyprus’ tax treaties and the 12.5% corporate tax rate, a company is required to appoint at least one director who must be resident in Cyprus;
A Cyprus holding company enjoys exemption from withholding taxes on dividends paid to a resident company whether they are received from a foreign company or another Cyprus resident company;
Local companies will benefit from a wide network of double taxation treaties. The government of Cyprus had signed over 55 DTAs with at least 47 countries, including China, India, Ireland, Singapore, the United Kingdom and the United States;
Companies will enjoy exemption from corporate income tax on income sourced from operations abroad as well as exemption from capital gains tax and estate duty on income from immovable property outside Cyprus.

Other advantages prompting foreign entrepreneurs and investor to consider doing business in Cyprus include:

Up to 80% of income generated by Cypriot companies engaged in activities related to Intellectual Property (IP) is exempt from taxes; only 20% of the total profits is liable for taxes;
Although seen as a safe haven for taxes, Cyprus is listed on the OECD ‘white list’ of global jurisdictions that are fully compliant with the international standards of tax;
Tax resident companies can carry forward their tax losses incurred within a fiscal year for the subsequent 5 years and the same can be offset against the taxable income;;
As a member of the European Union, Cyprus enjoys all the benefits of the EU regulations and treaties including, and particularly, the free movement of capital within and outside the EU region.

Cyprus laws are investor friendly due to the reasons given below:

An opportunity to acquire Cyprus citizenship is offered to all the investors in Cyprus. A Cyprus citizenship has all the benefits that an EU citizenship has, i.e. the right to live, work, and move freely within the entire EU area; In October 2020, the Cypriot government abolished its golden visa program for wealthy investors. Therefore, the foreign investors cannot currently acquire citizenship by investment, but there are other options we could discuss and advise you further.
Incorporation of a Cyprus company gives the right to the Real Owner and his family members to a long stay visa for two years (renewable) and work permit. In 7 years to a Cyprus, they can apply for a Cyprus citizenship and get an EU passport;
A Cyprus company can be re-domiciled abroad to any other country;
Cypriot laws allow the investor to retain their anonymity and hold their property under an international trust; 100% tax exemption on inward and outward dividends.

D. Conclusion

Cyprus is an ideal location for establishing a regional headquarters for a company with a global presence. Located int eh easter Mediterranean between Europe, Middle East and North Africa, Cyprus is an optimum jurisdiction to centralise and coordinate a company’s intercontinental operations;

Additionally, for Clients looking to establish abroad to minimise tax implications, Cyprus is a good choice of jurisdiction for legal tax optimisation;

Cyprus is an attractive place for new entrepreneurs aiming to engage in young and innovative businesses. These innovative start-up companies are provided with numerous tax benefits including a deduction of the qualified expenditure incurred from the investor’s taxable income of up to 50% of the taxable income or €150,000, whichever is lesser.

If you need to settle in Cyprus, you will enjoy a beautiful country with a mild climate, no crime rate, hospitable population, plenty of human recourses for your needs, a fantastic cuisine and tasty fruits and vegetables.

E. AP Law Firm

Andria Papageorgiou Law Firm can assist you with any matter relevant to the below:

Corporate and Commercial;
Employment;
Immigration;
Real Estate;
Intellectual Property;
Data Protection;
Banking and Finance;
Regulatory and Licensing Advisory

Should you have any further questions, please do not hesitate to contact us at info@apapageorgiou.com.

Disclaimer: The information contained in this article is provided for informational purposes only, and should not be construed as legal advice on any matter. Andria Papageorgiou Law Firm is not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this article and in no event shall be liable for any damages resulting from reliance on or use of this information.

General, NewsSeptember 20, 20210 comments

by Andria Papageorgiou

CySEC New Directive for the Registration of Crypto Providers

The Cyprus Securities and Exchange Commission (CySEC) issued on Friday a directive about the registration and operating conditions of providers of services related to cryptocurrencies. According to the guidelines, published only in the Greek language, CySEC provides certain procedures to follow in order to comply with the recent transposition of AMLD5 measures taken in the European Union (EU) to combat Anti-Money Laundering and Counter-Terrorist Financing.

The registration fee for the providers who want to apply before CySEC for authorization under the said directive would be EUR 10,000, and the renewal fee shall be EUR 50,000. In terms of the board’s composition, there should be a minimum of four members: two executives and two non-executives. Furthermore, among the conditions set out in the said directive, the companies should comply with some requirements such as good reputation, appropriate policies, systems and procedures, relevant security policies, and remuneration requirements, as specified by the CySEC.

In addition to the said directive, it is expected that the CySEC will issue a policy statement very soon clarifying other relevant matters. Additionally, there is a CySEC application file available with the updated regulatory requirements to follow the AMLD5 rulings.

It is well admitted by CySEC, who shares the position of the European Securities and Markets Authority (ESMA), that some crypto assets, including the so-called virtual currencies, such as Bitcoin, are highly risky and speculative, and investors must be alert to the high risks of buying and/or holding these instruments, including the possibility of losing all their money. Crypto assets come in many forms but the majority of them remain unregulated in the EU including Cyprus.

In light of all the above, it is quite evident that the incorporation of crypto-asset businesses under the scope of the EU AML legislation under the amended 5th AML Law in Cyprus is a very significant step.

Should you have any further questions, please do not hesitate to contact us at info@apapageorgiou.com.

Disclaimer: The information contained in this article is provided for informational purposes only, and should not be construed as legal advice on any matter. Andria Papageorgiou Law Firm is not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this article and in no event shall be liable for any damages resulting from reliance on or use of this information.

COMPLIANCE, News, REGULATORYJune 29, 20210 comments

by Andria Papageorgiou

The Use of Electronic Signature

Undoubtedly and unsurprisingly, the COVID-19 pandemic has affected businesses and individuals in a variety of ways. One aspect, which has been discussed to a great extent, is the use of electronic signatures in Cyprus and the legal implications of their use.

The Regulation (EU) N 910/2014

In an aim to improve trust in EU-wide electronic transactions and to increase the effectiveness of public and private online services and e-commerce, Regulation (EU) N 910/2014 on electronic identification and trust services for electronic transactions in the internal market (the “eIDAS Regulation”) created a new system for secure electronic interactions across the EU between businesses, citizens and public authorities, setting out the conditions under which Member States recognize electronic identification means of natural and legal persons falling under a notified electronic identification scheme of another Member State, rules for trust services (for the verification of the identity of individuals and businesses online, as well as authenticity of documents) and establishing a legal framework for electronic signatures, seals, time stamps, documents, registered delivery services and certificate services for website authentication.

The Cyprus Law 55(I)/2018

The eIDAS Regulation has been incorporated into Cyprus law in 2018 through Law 55(I)/2018 (the “Law”).

The three types of electronic signatures

Three types of electronic signatures, each with different judicial value, are distinguished by the Regulation, as follows:
1. an “electronic signature” is defined by the Regulation as “data in electronic form which is attached to or logically associated with other data in electronic form and which is used by the signatory to sign”;
2. an “advanced electronic signature” is “an electronic signature which is uniquely linked to the signatory, is capable of identifying the signatory, is created by using electronic signature creation data that the signatory can, with a high level of confidence, use under their sole control and is linked to the data therewith in such a way that any subsequent change in the data is detectable”; and
3. a “qualified electronic signature”, which is an advanced electronic signature created by a qualified electronic signature creation device having the added comfort of being based on a qualified certificate for electronic signatures.

Admissibility and legal validity of electronic signatures

The Regulation specifies that an electronic signature cannot be denied legal effect or be deemed inadmissible as evidence in legal proceedings solely on the grounds that it is in an electronic form or that it does not meet the requirements for qualified electronic signatures. However, it grants the “qualified electronic signature” the most significant judicial value deeming that it shall be equivalent to a handwritten signature.

Obtaining a qualified electronic signature

The procedure of obtaining a qualified electronic signature under Cyprus law was announced in May, amidst the COVD-19 pandemic, by the Deputy Ministry of Research, Innovation and Digital Policy of Cyprus. The Cyprus Stock Exchange has been authorised as a Certification Service Provider to issue qualified certificates on electronic signatures, though the government has already signed a Memorandum of Understanding with commercial banks that will enable and promote electronic signatures in the banking sector.

The validity period of such qualified e-signatures is currently set at one year from the date of issuance of the qualified certificate.

The sole Qualified Trust Service Provider (QTSP) currently registered in Cyprus is JCC Payment Services Ltd and, there are just two other Greek Companies, registered in Europe, carrying out activities in Cyprus: Byte Computer ΑΕ and ADACOM S.A. However, with the passing of the new legislation it is likely that these companies will face competition.

Difficulties and complications

While electronic signatures and even advanced electronic signatures were occasionally used prior to the COVID-19 pandemic, an increase in their use was noticed under the current circumstances. Such increased use of digital signatures has highlighted certain issues with their applicability and implementation. One such problem arises with documents that require witnessing. Common law provisions, applicable in Cyprus, require the physical presence of witnesses in the same location as the signatory. Therefore, a witnessing and attestation requirement is only satisfied in the case of an electronically executed document where the witness is physically present in the same location as the signatory. While the witness can still attest the document via a digital signature from the same location as the signatory, “remote” witnessing (e.g. by video link) is not permitted.

However, it is worth mentioning that certain, if not all, local authorities and institutions are still reluctant in accepting the digital signatures. In addition, it is evident that there are still no judicial decisions in relation to the use and implementation of electronic signatures, in order to see how the Cypriot courts would interpret and apply the relevant regulatory and legal provisions.

Last but not least is the fact that heavy dependence on electronic means will bring a higher demand for cyber security which may include a requirement for the use of electronic passports. Steps such as the creation of an electronic passport are likely to meet with resistance from some sectors of society, since, whilst they are superficially equivalent to a biometric identity card, they include continuously updated real data about an individual.

Should you have any further questions, please do not hesitate to contact us at info@apapageorgiou.com.

News, REGULATORYJune 28, 20210 comments

by Andria Papageorgiou

ESMA Guidelines (ESMA35-36-1952) on certain aspects of the MiFID II compliance function requirements

The European Securities and Markets Authority (ESMA) has published the Guidelines on certain aspects of the MiFID II compliance function requirements (‘the Guidelines’), on 6 April 2021 translated in all official languages of the EU. These Guidelines, replace the previous ESMA guidelines on the same topic issued in 2012.

The Guidelines apply in relation to the requirement of the Regulated Entities who, as part of their obligations under the Investment Services and Activities and Regulated Markets Law of 2017 (‘the Law’), must ensure that the compliance function fulfils the requirements set out in Article 22 of MiFID II Delegated Regulation 565/2017 by maintaining an efficient compliance function in accordance with Article 17(2) of the Law.

The Guidelines’ objective is the establishment of consistent, efficient and effective supervisory practices and to ensure the common, uniform and consistent application of certain aspects of the MiFID II compliance function.

Therefore, these Guidelines aim at requiring the Regulated Entities to have a robust governance framework by implementing systems and controls, policies and procedures, establishing an independent and effective compliance function to manage risks and ensure compliance with their regulatory obligations.

In brief, the said Guidelines focus on the below areas:

Guideline on the compliance risk assessment;
Guideline on the monitoring obligations of the compliance function;
Guideline on the reporting obligations of the compliance function;
Guideline on the advisory and assistance obligations of the compliance function;
Guideline on the effectiveness of the compliance function;
Guideline on the skills, knowledge, expertise and authority of the compliance function;
Guideline on the permanence of the compliance function;
Guideline on the Independence of the compliance function;
Guideline regarding the proportionality with regard to the effectiveness of the compliance function;
Guidelines on combining the compliance function with other internal control functions;
Guidelines on outsourcing of the compliance function;
Guidelines on the review of the compliance function by competent authorities;

The Guidelines apply from two months of the date of publication of the guidelines on ESMA’s website in all EU official languages, i.e. 07 June 2021.

CySEC adopts these Guidelines by incorporating them into its supervisory practices and regulatory approach.

Regulated Entities must take the necessary actions in order to ensure their compliance with the Guidelines.

Should you have any further questions, please do not hesitate to contact us at info@apapageorgiou.com.

COMPLIANCE, News, REGULATORYJune 2, 20210 comments

by Andria Papageorgiou

EU List of third country non-cooperative jurisdictions for tax purposes and possible implications

In last February the ECOFIN Council updated the EU list of third country non-cooperative jurisdictions for tax purposes (the so-called EU ‘blacklist’) and the list became official upon publication in the Official Journal on 26 February 2021.

The EU list of non-cooperative jurisdictions for tax purposes is a tool to tackle:

tax fraud or evasion: illegal non-payment or under payment of tax
tax avoidance: use of legal means to minimise tax liability
money laundering: concealment of origins of illegally obtained money

The updated EU ‘blacklist’ includes the following jurisdictions:

American Samoa
Anguilla
Dominica
Fiji
Guam
Palau
Panama
Samoa
Seychelles
Trinidad and Tobago
US Virgin Islands
Vanuatu

The EU has previously decided that, as from 2020, the list will be updated twice a year.

Various defensive measures are currently being enacted by EU Member States which should negatively affect entities resident in jurisdictions on the EU ‘blacklist‘. These defensive measures include increased withholding taxes (WHT), stricter CFC rules, denial of deductibility of expenses, denial of participation exemption, increased monitoring and audits, special documentation requirements etc.

From a Cyprus tax angle, it is noted that the Cypriot Ministry of Finance recently submitted to Parliament a draft bill (currently having an effective date as from 1 July 2021) which introduces WHT for certain payments to companies in the EU ‘blacklist’ jurisdictions, as follows:

For payments of dividends, WHT at the rate of 17%;
For payments of passive interest, WHT at the rate of 30%; and
For payments of royalties, WHT at the rate of 10%.

Finally, increased DAC6 reporting obligations may apply to certain related party transactions between companies in the EU and the EU ‘blacklisted’ jurisdictions, as the relevant Hallmark can be met irrespective if the Main Benefit Test is also satisfied.

Should you have any further questions, please do not hesitate to contact us at info@apapageorgiou.com.

Disclaimer: The information contained in this article is provided for informational purposes only, and should not be construed as legal advice on any matter. Andria Papageorgiou Law Firm is not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this article and in no event shall be liable for any damages resulting from reliance on or use of this information.

AML, Finance, NewsMay 28, 20210 comments

by Andria Papageorgiou

Cyprus enacts the 5th Anti Money Laundering Directive Introducing Crypto Assets

The enactment of the 5th Anti Money Laundering Directive via amendment of Law 188(I)/2007 constitutes the introduction of mandatory crypto assets regulation in Cyprus. In light of further emerging national and European regulation, a balance should be struck between initiative and consistency.

NewsApril 15, 20210 comments

by Andria Papageorgiou

New consequences for late filings to the Registrar of Companies

With reference to the announcement of the Department of Registrar of Companies and Official Receiver on the 16th of April 2020 and the publication of the Companies (Amendment) (No. 4) Law of 2020 (the “Law”) to the Official Gazette of the Republic of Cyprus on the 17th of December 2020 (Par. I (I), No. 4794), the Department of Registrar of Companies and Official Receiver officially announced the following:

NewsMarch 5, 20210 comments

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